The US ratings agency S&P cut Ukraine’s credit rating to ‘selective default’ on Friday, citing the war-torn country’s failure to make a coupon payment on an existing bond.Â
‘The rating actions reflect the missed payment on the coupon of Ukraine’s 2026 Eurobond,’ S&P said in a statement explaining its decision to downgrade Ukraine’s credit rating to ‘SD/SD’ from ‘CC/C.’Â
‘We do not expect the payment within the bond’s contractual grace period of 10 business days,’ it continued, adding that this view was based on ‘the passage of a Ukrainian law in mid-July that authorizes the government to temporarily suspend payments’ on some debt liabilities.
S&P’s decision follows the July 24 decision by Fitch — another top US ratings agency — to downgrade Ukraine’s credit rating to ‘C’ from ‘CC,’ leaving it just one notch above default. Â
Fitch said in a statement that its decision was based in part on its view that an agreement Ukraine struck with some Eurobond holders ‘marks the start of a default-like process.’
Ukraine’s economy has been battered by the ongoing Russian invasion, which is now well into its third year.Â
The International Monetary Fund recently downgraded Ukraine’s economic outlook, citing a series of ‘devastating’ Russian attacks against its energy infrastructure, while approving a $2.2 billion payout to support the country’s budget under an existing loan agreement.